Fed Desperate To Rise Above the Near Zero Fed Funds Rate Target Range — Need Three Months Of 300,000 Plus Per Month Job Creation, Wage Growth and 3% First Quarter 2015 Real Gross Domestic Product Growth Numbers To Jump to .5 – 1.0% Range Fed Funds Rate Target — June 2015 Launch Date Expected — Fly Me To The Moon — Summertime — Launch — Abort On Recession — Videos

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The Pronk Pops Show Podcasts

Pronk Pops Show 430: March 19, 2015

Pronk Pops Show 429: March 18, 2015

Pronk Pops Show 428: March 17, 2015 

Pronk Pops Show 427: March 16, 2015

Pronk Pops Show 426: March 6, 2015

Pronk Pops Show 425: March 4, 2015

Pronk Pops Show 424: March 2, 2015

Pronk Pops Show 423: February 26, 2015

Pronk Pops Show 422: February 25, 2015 

Pronk Pops Show 421: February 20, 2015

Pronk Pops Show 420: February 19, 2015

Pronk Pops Show 419: February 18, 2015

Pronk Pops Show 418: February 16, 2015

Pronk Pops Show 417: February 13, 2015

Pronk Pops Show 416: February 12, 2015

Pronk Pops Show 415: February 11, 2015

Pronk Pops Show 414: February 10, 2015

Pronk Pops Show 413: February 9, 2015

Pronk Pops Show 412: February 6, 2015

Pronk Pops Show 411: February 5, 2015

Pronk Pops Show 410: February 4, 2015

Pronk Pops Show 409: February 3, 2015

Pronk Pops Show 408: February 2, 2015

Pronk Pops Show 407: January 30, 2015

Pronk Pops Show 406: January 29, 2015

Pronk Pops Show 405: January 28, 2015

Pronk Pops Show 404: January 27, 2015

Pronk Pops Show 403: January 26, 2015

Pronk Pops Show 402: January 23, 2015

Pronk Pops Show 401: January 22, 2015

Pronk Pops Show 400: January 21, 2015

Pronk Pops Show 399: January 16, 2015

Pronk Pops Show 398: January 15, 2015

Pronk Pops Show 397: January 14, 2015

Pronk Pops Show 396: January 13, 2015

Pronk Pops Show 395: January 12, 2015

Pronk Pops Show 394: January 7, 2015

Pronk Pops Show 393: January 5, 2015

Pronk Pops Show 392: December 19, 2014

Pronk Pops Show 391: December 18, 2014

Pronk Pops Show 390: December 17, 2014

Pronk Pops Show 389: December 16, 2014

Pronk Pops Show 388: December 15, 2014

Pronk Pops Show 387: December 12, 2014

Pronk Pops Show 386: December 11, 2014

Pronk Pops Show 385: December 9, 2014

Pronk Pops Show 384: December 8, 2014

Pronk Pops Show 383: December 5, 2014

Pronk Pops Show 382: December 4, 2014

Pronk Pops Show 381: December 3, 2014

Pronk Pops Show 380: December 1, 2014

Story 1: Fed Desperate To Rise Above the Near Zero Fed Funds Rate Target Range — Need Three Months Of 300,000 Plus Per Month Job Creation, Wage Growth and 3% First Quarter 2015 Real Gross Domestic Product Growth Numbers To Jump to .5 – 1.0% Range Fed Funds Rate Target — June 2015 Launch Date Expected —  Fly Me To The Moon — Summertime — Launch — Abort On Recession — Videos

moonspace

moon earthstarsApollo_17_The_Last_Moon_Shot_Edit1launch_abort_buttons

Amazing seven year old sings Fly Me To The Moon (Angelina Jordan) on Senkveld “The Late Show”

Forrest Gump JFK “I Gotta Pee” Scene

Fed Decision: The Three Most Important Things Janet Yellen Said

Press Conference with Chair of the FOMC, Janet L. Yellen

Monetary Policy Based on the Taylor Rule

Many economists believe that rules-based monetary policy provides better economic outcomes than a purely discretionary framework delivers. But there is disagreement about the advantages of rules-based policy and even disagreement about which rule works. One possible policy rule would be for the central bank to follow a Taylor Rule, named after our featured speaker, John B. Taylor. What would some of the advantages of a Taylor Rule be versus, for instance, a money growth rule, or a rule which only specifies the inflation target? How could a policy rule be implemented? Should policy rule legislation be considered? Join us as Professor Taylor addresses these important policy questions.

Murray N. Rothbard on Milton Friedman pre1971

On Milton Friedman | by Murray N. Rothbard

Who Was the Better Monetary Economist? Rothbard and Friedman Compared | Joseph T. Salerno

Joseph Salerno “Unmasking the Federal Reserve”

Rothbard on Alan Greenspan

Milton Friedman – Money and Inflation

Milton Friedman – Abolish The Fed

Milton Friedman On John Maynard Keynes

Hayek on Keynes’s Ignorance of Economics

Friedrich Hayek explains to Leo Rosten that while brilliant Keynes had a parochial understanding of economics.

On John Maynard Keynes | by Murray N. Rothbard

Hayek on Milton Friedman and Monetary Policy

Friedrich Hayek: Why Intellectuals Drift Towards Socialism

Capitalism, Socialism, and the Jews

The Normal State of Man: Misery & Tyranny

Peter Schiff Interviews Keynesian Economist Laurence Kotlikoff 01-18-12

Larry Kotlikoff on the Clash of Generations

Extended interview with Boston University Economics Professor Larry Kotlikoff on his publications about a six-decade long Ponzi scheme in the US which he says will lead to a clash of generations.

Kotlikoff also touches on what his projections mean for the New Zealand economy and why Prime Minister John Key should take more attention of New Zealand’s ‘fiscal gap’ – the gap between all future government spending commitments and its future revenue track.

Thomas Sowell on Intellectuals and Society

Angelina Jordan – summertime

Angelina Jordan synger Sinatra i semifinalen i Norske Talenter 2014

Release Date: March 18, 2015

For immediate release

Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow and export growth has weakened. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of energy price declines and other factors dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.

http://www.federalreserve.gov/newsevents/press/monetary/20150318a.htm

Advance release of table 1 of the Summary of Economic Projections to be released with the FOMC minutes

Percent

Variable Central tendency1 Range2
2015 2016 2017 Longer run 2015 2016 2017 Longer run
Change in real GDP 2.3 to 2.7 2.3 to 2.7 2.0 to 2.4 2.0 to 2.3 2.1 to 3.1 2.2 to 3.0 1.8 to 2.5 1.8 to 2.5
December projection 2.6 to 3.0 2.5 to 3.0 2.3 to 2.5 2.0 to 2.3 2.1 to 3.2 2.1 to 3.0 2.0 to 2.7 1.8 to 2.7
Unemployment rate 5.0 to 5.2 4.9 to 5.1 4.8 to 5.1 5.0 to 5.2 4.8 to 5.3 4.5 to 5.2 4.8 to 5.5 4.9 to 5.8
December projection 5.2 to 5.3 5.0 to 5.2 4.9 to 5.3 5.2 to 5.5 5.0 to 5.5 4.9 to 5.4 4.7 to 5.7 5.0 to 5.8
PCE inflation 0.6 to 0.8 1.7 to 1.9 1.9 to 2.0 2.0 0.6 to 1.5 1.6 to 2.4 1.7 to 2.2 2.0
December projection 1.0 to 1.6 1.7 to 2.0 1.8 to 2.0 2.0 1.0 to 2.2 1.6 to 2.1 1.8 to 2.2 2.0
Core PCE inflation3 1.3 to 1.4 1.5 to 1.9 1.8 to 2.0 1.2 to 1.6 1.5 to 2.4 1.7 to 2.2
December projection 1.5 to 1.8 1.7 to 2.0 1.8 to 2.0 1.5 to 2.2 1.6 to 2.1 1.8 to 2.2

Note: Projections of change in real gross domestic product (GDP) and projections for both measures of inflation are percent changes from the fourth quarter of the previous year to the fourth quarter of the year indicated. PCE inflation and core PCE inflation are the percentage rates of change in, respectively, the price index for personal consumption expenditures (PCE) and the price index for PCE excluding food and energy. Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated. Each participant’s projections are based on his or her assessment of appropriate monetary policy. Longer-run projections represent each participant’s assessment of the rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy. The December projections were made in conjunction with the meeting of the Federal Open Market Committee on December 16-17, 2014.

1. The central tendency excludes the three highest and three lowest projections for each variable in each year.  Return to table

2. The range for a variable in a given year includes all participants’ projections, from lowest to highest, for that variable in that year.  Return to table

3. Longer-run projections for core PCE inflation are not collected.  Return to table

Figure 1. Central tendencies and ranges of economic projections, 2015-17 and over the longer run

Central tendencies and ranges of economic projections for years 2015 through 2017 and over the longer run. Actual values for years 2010 through 2014.

Change in real GDP
Percent

2010 2011 2012 2013 2014 2015 2016 2017 Longer Run
Actual 2.7 1.7 1.6 3.1 2.4
Upper End of Range 3.1 3.0 2.5 2.5
Upper End of Central Tendency 2.7 2.7 2.4 2.3
Lower End of Central Tendency 2.3 2.3 2.0 2.0
Lower End of Range 2.1 2.2 1.8 1.8

Unemployment rate
Percent

2010 2011 2012 2013 2014 2015 2016 2017 Longer Run
Actual 9.5 8.7 7.8 7.0 5.7
Upper End of Range 5.3 5.2 5.5 5.8
Upper End of Central Tendency 5.2 5.1 5.1 5.2
Lower End of Central Tendency 5.0 4.9 4.8 5.0
Lower End of Range 4.8 4.5 4.8 4.9

PCE inflation
Percent

2010 2011 2012 2013 2014 2015 2016 2017 Longer Run
Actual 1.3 2.7 1.6 1.0 1.1
Upper End of Range 1.5 2.4 2.2 2.0
Upper End of Central Tendency 0.8 1.9 2.0 2.0
Lower End of Central Tendency 0.6 1.7 1.9 2.0
Lower End of Range 0.6 1.6 1.7 2.0

Note: Definitions of variables are in the general note to the projections table. The data for the actual values of the variables are annual.

Figure 2. Overview of FOMC participants’ assessments of appropriate monetary policy

Appropriate timing of policy firming

2015 2016
Number of participants 15 2

Note: In the upper panel, the height of each bar denotes the number of FOMC participants who judge that, under appropriate monetary policy, the first increase in the target range for the federal funds rate from its current range of 0 to 1/4 percent will occur in the specified calendar year. In December 2014, the numbers of FOMC participants who judged that the first increase in the target federal funds rate would occur in 2015, and 2016 were, respectively, 15, and 2.

Appropriate pace of policy firming: Midpoint of target range or target level for the federal funds rate
Number of participants with projected midpoint of target range or target level

Midpoint of target range
or target level (Percent)
2015 2016 2017 Longer Run
0.125 2
0.250
0.375 1 1
0.500
0.625 7
0.750
0.875 3
1.000
1.125 1 1
1.250
1.375 2
1.500
1.625 1 6
1.750
1.875 3
2.000 1
2.125 1
2.250 1
2.375
2.500
2.625 1 3
2.750
2.875 2
3.000 1
3.125 4
3.250
3.375 2 1
3.500 7
3.625 2
3.750 1 2 6
3.875 1
4.000 1 2
4.125
4.250 1

Note: In the lower panel, each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual participant’s judgment of the midpoint of the appropriate target range for the federal funds rate or the appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run.

http://www.federalreserve.gov/monetarypolicy/fomcprojtabl20150318.htm

Janet Yellen Isn’t Going to Raise Interest Rates Until She’s Good and Ready

The key words in Janet L. Yellen’s news conference Wednesday were rather pithy, at least by central bank standards. “Just because we removed the word ‘patient’ from the statement doesn’t mean we are going to be impatient,” Ms. Yellen, the Federal Reserve chairwoman, said.

With this framing, Ms. Yellen was putting her firm stamp on the policy of an institution she has led for just over a year — and making clear that she will not be boxed in. Her words and accompanying announcements conveyed the message that the Yellen Fed has no intention of taking the support struts of low interest rates away until she is absolutely confident that economic growth will hold up without them.

Photo

Janet Yellen held a news conference after a meeting of the Federal Open Market Committee in Washington on Wednesday. CreditChip Somodevilla/Getty Images

Ms. Yellen’s comments about patience versus impatience were part of that dance. But the dual message was even more powerful when combined with other elements of the central bank’s newly released information, which sent the signal that members of the committee intend to move cautiously on rate increases.

By eliminating the reference to “patience,” Paul Edelstein, an economist at IHS Global Insight, said in a research note, “The Fed did what it was expected to do.”

“But beyond that,” he added, “the committee appeared much more dovish and in not much of a hurry to actually pull the trigger.”

Fed officials’ forecasts of how high rates will be at year’s end for 2015, 2016 and 2017 all fell compared to where they were in December. They marked down their forecast for economic growth and inflation for all three years, implying that the nation’s economic challenge is tougher and inflation risks more distant than they had seemed a few months ago.

Particularly interesting was that Fed officials lowered their estimate of the longer-run unemployment rate, to 5 to 5.2 percent, from 5.2 to 5.5 percent. With joblessness hitting 5.5 percent in February, that implied that policy makers are convinced the job market has more room to tighten before it becomes too tight. Fed leaders now forecast unemployment rates in 2016 and 2017 that are a bit below what many view as the long-term sustainable level, which one would expect to translate into rising wages.

In other words, they want to run the economy a little hot for the next couple of years to help spur the kinds of wage gains that might return inflation to the 2 percent level they aim for, but which they have persistently undershot in recent years.

Apart from the details of the dovish monetary policy signals Ms. Yellen and her colleagues sent, it is clear she wanted to jolt markets out of any feeling that policy is on a preordained path.

At times over the last couple of years, the Fed had seemed to set a policy course and then go on a forced march until it got there, regardless of whether the jobs numbers were good or bad, or whether inflation was rising or falling. That is certainly how it felt when the Fed decided in December 2013 to wind down its quantitative easing policies by $10 billion per meeting, which it did through the first nine months of 2014 with few signs of re-evaluation as conditions evolved.

In her first news conference as chairwoman a year ago, Ms. Yellen had suggested that rate increases might be on a similar preordained path by saying that she could imagine rate increases “around six months” after the conclusion of quantitative easing. (That comment increasingly looks to have been a rookie mistake, and she later backed away from it.)

There are likely to be plenty of twists and turns in the coming months. After this week’s meeting, Ms. Yellen reinforced the message she has been trying to convey that the committee really will adapt its policy to incoming information rather than simply carry on with the path it set a year ago.

If the strengthening dollar and falling oil prices start to translate into still-lower expectations for future inflation, the Fed will hold off from rate rises — and the same if wage gains and other job market indicators show a lack of progress.

Conversely, if the job market recovery keeps going gangbusters and it becomes clear that inflation is going to rise back toward 2 percent, Ms. Yellen does not want to be constrained by language about “patience.”

“This change does not necessarily mean that an increase will occur in June,” Ms. Yellen said, “though we cannot rule that out.”

She has now bought herself some latitude to decide when and how the Fed ushers in an era of tighter money. Now the question is just how patient or impatient American economic conditions will allow her to be.

http://www.nytimes.com/2015/03/19/upshot/janet-yellen-isnt-going-to-raise-interest-rates-until-shes-good-and-ready.html?_r=0&abt=0002&abg=1

Taylor rule

From Wikipedia, the free encyclopedia

John B. Taylor

Not to be confused with Taylor Law or Taylor’s law.

In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. In particular, the rule stipulates that for each one-percent increase in inflation, the central bank should raise the nominal interest rate by more than one percentage point. This aspect of the rule is often called the Taylor principle.

The rule of was first proposed by John B. Taylor,[1] and simultaneously by Dale W. Henderson and Warwick McKibbin in 1993.[2] It is intended to foster price stability and full employment by systematically reducing uncertainty and increasing the credibility of future actions by the central bank. It may also avoid the inefficiencies of time inconsistency from the exercise ofdiscretionary policy.[3][4] The Taylor rule synthesized, and provided a compromise between, competing schools of economics thought in a language devoid of rhetorical passion.[5] Although many issues remain unresolved and views still differ about how the Taylor rule can best be applied in practice, research shows that the rule has advanced the practice of central banking.[6]

As an equation

According to Taylor’s original version of the rule, the nominal interest rate should respond to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP:

i_t = \pi_t + r_t^* + a_\pi  ( \pi_t - \pi_t^* )  + a_y ( y_t - \bar y_t ).

In this equation, \,i_t\, is the target short-term nominal interest rate (e.g. the federal funds rate in the US, the Bank of England base rate in the UK), \,\pi_t\, is the rate ofinflation as measured by the GDP deflator, \pi^*_t is the desired rate of inflation, r_t^* is the assumed equilibrium real interest rate, \,y_t\, is the logarithm of real GDP, and \bar y_tis the logarithm of potential output, as determined by a linear trend.

In this equation, both a_{\pi} and a_y should be positive (as a rough rule of thumb, Taylor’s 1993 paper proposed setting a_{\pi}=a_y=0.5).[7] That is, the rule “recommends” a relatively high interest rate (a “tight” monetary policy) when inflation is above its target or when output is above its full-employment level, in order to reduce inflationary pressure. It recommends a relatively low interest rate (“easy” monetary policy) in the opposite situation, to stimulate output. Sometimes monetary policy goals may conflict, as in the case of stagflation, when inflation is above its target while output is below full employment. In such a situation, a Taylor rule specifies the relative weights given to reducing inflation versus increasing output.

The Taylor principle

By specifying a_{\pi}>0, the Taylor rule says that an increase in inflation by one percentage point should prompt the central bank to raise the nominal interest rate by more than one percentage point (specifically, by 1+a_{\pi}, the sum of the two coefficients on \pi_t in the equation above). Since the real interest rate is (approximately) the nominal interest rate minus inflation, stipulating a_{\pi}>0 implies that when inflation rises, the real interest rate should be increased. The idea that the real interest rate should be raised to cool the economy when inflation increases (requiring the nominal interest rate to increase more than inflation does) has sometimes been called the Taylor principle.[8]

During an EconTalk podcast Taylor explained the rule in simple terms using three variables: inflation rate, GDP growth, and the interest rate. If inflation were to rise by 1%, the proper response would be to raise the interest rate by 1.5% (Taylor explains that it doesn’t always need to be exactly 1.5%, but being larger than 1% is essential). If GDP falls by 1% relative to its growth path, then the proper response is to cut the interest rate by .5%.[9]

Alternative versions of the rule

While the Taylor principle has proved very influential, there is more debate about the other terms that should enter into the rule. According to some simple New Keynesian macroeconomic models, insofar as the central bank keeps inflation stable, the degree of fluctuation in output will be optimized (Blanchard and Gali call this property the ‘divine coincidence‘). In this case, the central bank need not take fluctuations in the output gap into account when setting interest rates (that is, it may optimally set a_y=0.) On the other hand, other economists have proposed including additional terms in the Taylor rule to take into account money gap[10] or financial conditions: for example, the interest rate might be raised when stock prices, housing prices, or interest rate spreads increase.

Empirical relevance

Although the Federal Reserve does not explicitly follow the Taylor rule, many analysts have argued that the rule provides a fairly accurate summary of US monetary policy under Paul Volcker and Alan Greenspan.[11][12] Similar observations have been made about central banks in other developed economies, both in countries like Canada and New Zealand that have officially adopted inflation targeting rules, and in others like Germany where the Bundesbank‘s policy did not officially target the inflation rate.[13][14] This observation has been cited by Clarida, Galí, and Gertler as a reason why inflation had remained under control and the economy had been relatively stable (the so-called ‘Great Moderation‘) in most developed countries from the 1980s through the 2000s.[11] However, according to Taylor, the rule was not followed in part of the 2000s, possibly leading to the housing bubble.[15][16] Certain research has determined that some households form their expectations about the future path of interest rates, inflation, and unemployment in a way that is consistent with Taylor-type rules.[17]

Criticisms

Athanasios Orphanides (2003) claims that the Taylor rule can misguide policy makers since they face real-time data. He shows that the Taylor rule matches the US funds rate less perfectly when accounting for these informational limitations and that an activist policy following the Taylor rule would have resulted in an inferior macroeconomic performance during the Great Inflation of the seventies.[18]

See also

References

  1. Jump up^ Taylor, John B. (1993). “Discretion versus Policy Rules in Practice”. Carnegie-Rochester Conference Series on Public Policy 39: 195–214. (The rule is introduced on page 202.)
  2. Jump up^ Henderson, D. W.; McKibbin, W. (1993). “A Comparison of Some Basic Monetary Policy Regimes for Open Economies: Implications of Different Degrees of Instrument Adjustment and Wage Persistence”. Carnegie-Rochester Conference Series on Public Policy 39: 221–318. doi:10.1016/0167-2231(93)90011-K.
  3. Jump up^ Athanasios Orphanides (2008). “Taylor rules,” The New Palgrave Dictionary of Economics, 2nd Edition. v. 8, pp. 2000-2004.Abstract.
  4. Jump up^ Paul Klein (2009). “time consistency of monetary and fiscal policy,” The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.
  5. Jump up^ Kahn, George A.; Asso, Pier Francesco; Leeson, Robert (2007). “The Taylor Rule and the Transformation of Monetary Policy”. Federal Reserve Bank of Kansas City Working Paper 07-11. SSRN 1088466.
  6. Jump up^ Asso, Pier Francesco; Kahn, George A.; Leeson, Robert (2010). “The Taylor Rule and the Practice of Central Banking”. Federal Reserve Bank of Kansas City Working Paper 10-05. SSRN 1553978.
  7. Jump up^ Athanasios Orphanides (2008). “Taylor rules,” The New Palgrave Dictionary of Economics, 2nd Edition. v. 8, pp. 2000-2004, equation (7).Abstract.
  8. Jump up^ Davig, Troy; Leeper, Eric M. (2007). “Generalizing the Taylor Principle”. American Economic Review 97 (3): 607–635. doi:10.1257/aer.97.3.607.JSTOR 30035014.
  9. Jump up^ Econtalk podcast, Aug. 18, 2008, interview conducted by Russell Roberts, sponsored by the Library of Economics and Liberty.
  10. Jump up^ Benchimol, Jonathan; Fourçans, André (2012). “Money and risk in a DSGE framework : A Bayesian application to the Eurozone”. Journal of Macroeconomics34 (1): 95–111, Abstract.
  11. ^ Jump up to:a b Clarida, Richard; Galí, Jordi; Gertler, Mark (2000). “Monetary Policy Rules and Macroeconomic Stability: Theory and Some Evidence”. Quarterly Journal of Economics 115 (1): 147–180. doi:10.1162/003355300554692.JSTOR 2586937.
  12. Jump up^ Lowenstein, Roger (2008-01-20). “The Education of Ben Bernanke”. The New York Times.
  13. Jump up^ Bernanke, Ben; Mihov, Ilian (1997). “What Does the Bundesbank Target?”.European Economic Review 41 (6): 1025–1053. doi:10.1016/S0014-2921(96)00056-6.
  14. Jump up^ Clarida, Richard; Gertler, Mark; Galí, Jordi (1998). “Monetary Policy Rules in Practice: Some International Evidence”. European Economic Review 42 (6): 1033–1067. doi:10.1016/S0014-2921(98)00016-6.
  15. Jump up^ Taylor, John B. (2008). “The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong”.
  16. Jump up^ Taylor, John B. (2009). Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis. Hoover Institution Press. ISBN 0-8179-4971-2.
  17. Jump up^ Carvalho, Carlos; Nechio, Fernanda (2013). “Do People Understand Monetary Policy?”. Federal Reserve Bank of San Francisco Working Paper 2012-01.SSRN 1984321.
  18. Jump up^ Orphanides, A. (2003). “The Quest for Prosperity without Inflation”. Journal of Monetary Economics 50 (3): 633–663. doi:10.1016/S0304-3932(03)00028-X.

External links

http://en.wikipedia.org/wiki/Taylor_rule

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The Fed’s Long and Winding Road Back To A Normal Monetary Policy Starting in June 2015 With a .75% Increase in The Federal Fund’s Interest Rate Target — Two Years Too Late — Yeah, Yeah, Yeah, Yeah — Imagine, Stand By Me — Videos

Posted on March 19, 2015. Filed under: American History, Banking, British History, College, Communications, Documentary, Economics, Education, Employment, Energy, European History, Faith, Family, Federal Government Budget, Fiscal Policy, government spending, history, Investments, Law, liberty, Life, Links, Macroeconomics, Monetary Policy, Money, Money, Music, Natural Gas, Natural Gas, Oil, Oil, People, Philosophy, Photos, Politics, Press, Radio, Raves, Regulations, Resources, Strategy, Talk Radio, Tax Policy, Taxes, Unemployment, Video, Water, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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The Pronk Pops Show Podcasts

Pronk Pops Show 428: March 17, 2015 

Pronk Pops Show 427: March 16, 2015

Pronk Pops Show 426: March 6, 2015

Pronk Pops Show 425: March 4, 2015

Pronk Pops Show 424: March 2, 2015

Pronk Pops Show 423: February 26, 2015

Pronk Pops Show 422: February 25, 2015 

Pronk Pops Show 421: February 20, 2015

Pronk Pops Show 420: February 19, 2015

Pronk Pops Show 419: February 18, 2015

Pronk Pops Show 418: February 16, 2015

Pronk Pops Show 417: February 13, 2015

Pronk Pops Show 416: February 12, 2015

Pronk Pops Show 415: February 11, 2015

Pronk Pops Show 414: February 10, 2015

Pronk Pops Show 413: February 9, 2015

Pronk Pops Show 412: February 6, 2015

Pronk Pops Show 411: February 5, 2015

Pronk Pops Show 410: February 4, 2015

Pronk Pops Show 409: February 3, 2015

Pronk Pops Show 408: February 2, 2015

Pronk Pops Show 407: January 30, 2015

Pronk Pops Show 406: January 29, 2015

Pronk Pops Show 405: January 28, 2015

Pronk Pops Show 404: January 27, 2015

Pronk Pops Show 403: January 26, 2015

Pronk Pops Show 402: January 23, 2015

Pronk Pops Show 401: January 22, 2015

Pronk Pops Show 400: January 21, 2015

Pronk Pops Show 399: January 16, 2015

Pronk Pops Show 398: January 15, 2015

Pronk Pops Show 397: January 14, 2015

Pronk Pops Show 396: January 13, 2015

Pronk Pops Show 395: January 12, 2015

Pronk Pops Show 394: January 7, 2015

Pronk Pops Show 393: January 5, 2015

Pronk Pops Show 392: December 19, 2014

Pronk Pops Show 391: December 18, 2014

Pronk Pops Show 390: December 17, 2014

Pronk Pops Show 389: December 16, 2014

Pronk Pops Show 388: December 15, 2014

Pronk Pops Show 387: December 12, 2014

Pronk Pops Show 386: December 11, 2014

Pronk Pops Show 385: December 9, 2014

Pronk Pops Show 384: December 8, 2014

Pronk Pops Show 383: December 5, 2014

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Story 1: The Fed’s Long and Winding Road Back To A Normal Monetary Policy Starting in June 2015 With a .75% Increase in The Federal Fund’s Interest Rate Target — Two Years Too Late — Yeah, Yeah, Yeah, Yeah — Imagine, Stand By Me — Videos

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Federal Reserve Open Committee – March 2015 Meeting

Jim Rickards on Fed Chair Janet Yellen and The Strong Dollar

Peter Schiff on Weak Economy, Fed, Inflation, Asset Bubbles

Peter Schiff on The Strong Dollar, U.S. market risk and Fed Chair Janet Yellen

Peter Schiff Janet Yellen Is Wrong! There Is A LOT Of Inflation! US Economy On Verge In Crisis

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The Pronk Pops Show Podcasts Portfolio

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Up Up and Away Interest Rates Will Go — Until The Next Recession Hits — Fed Debates Use of Word Patient — It Is The Economy Stupid, Not The Stock Market and Wealth Effect — The Coming Deflation Caused By The Fed? — The Failure of Command and Control of Money’s Price — Interest Rates — Videos

Posted on March 17, 2015. Filed under: American History, Articles, Banking, Blogroll, British History, College, Communications, Corruption, Documentary, Economics, Education, Employment, European History, Faith, Family, Federal Communications Commission, Federal Government, Federal Government Budget, Fiscal Policy, Foreign Policy, government, government spending, history, Law, liberty, Life, Links, Macroeconomics, media, Microeconomics, Monetary Policy, Money, Money, People, Philosophy, Photos, Politics, Press, Rants, Raves, Tax Policy, Terrorism, Unemployment, Video, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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The Pronk Pops Show Podcasts

Pronk Pops Show 427: March 16, 2015

Pronk Pops Show 426: March 6, 2015

Pronk Pops Show 425: March 4, 2015

Pronk Pops Show 424: March 2, 2015

Pronk Pops Show 423: February 26, 2015

Pronk Pops Show 422: February 25, 2015 

Pronk Pops Show 421: February 20, 2015

Pronk Pops Show 420: February 19, 2015

Pronk Pops Show 419: February 18, 2015

Pronk Pops Show 418: February 16, 2015

Pronk Pops Show 417: February 13, 2015

Pronk Pops Show 416: February 12, 2015

Pronk Pops Show 415: February 11, 2015

Pronk Pops Show 414: February 10, 2015

Pronk Pops Show 413: February 9, 2015

Pronk Pops Show 412: February 6, 2015

Pronk Pops Show 411: February 5, 2015

Pronk Pops Show 410: February 4, 2015

Pronk Pops Show 409: February 3, 2015

Pronk Pops Show 408: February 2, 2015

Pronk Pops Show 407: January 30, 2015

Pronk Pops Show 406: January 29, 2015

Pronk Pops Show 405: January 28, 2015

Pronk Pops Show 404: January 27, 2015

Pronk Pops Show 403: January 26, 2015

Pronk Pops Show 402: January 23, 2015

Pronk Pops Show 401: January 22, 2015

Pronk Pops Show 400: January 21, 2015

Pronk Pops Show 399: January 16, 2015

Pronk Pops Show 398: January 15, 2015

Pronk Pops Show 397: January 14, 2015

Pronk Pops Show 396: January 13, 2015

Pronk Pops Show 395: January 12, 2015

Pronk Pops Show 394: January 7, 2015

Pronk Pops Show 393: January 5, 2015

Pronk Pops Show 392: December 19, 2014

Pronk Pops Show 391: December 18, 2014

Pronk Pops Show 390: December 17, 2014

Pronk Pops Show 389: December 16, 2014

Pronk Pops Show 388: December 15, 2014

Pronk Pops Show 387: December 12, 2014

Pronk Pops Show 386: December 11, 2014

Pronk Pops Show 385: December 9, 2014

Pronk Pops Show 384: December 8, 2014

Pronk Pops Show 383: December 5, 2014

Pronk Pops Show 382: December 4, 2014

Pronk Pops Show 381: December 3, 2014

Pronk Pops Show 380: December 1, 2014

Story 1: Up Up and Away Interest Rates Will Go — Until The Next Recession Hits — Fed Debates Use of Word Patient — It Is The Economy Stupid, Not The Stock Market and Wealth Effect — The Coming Deflation Caused By The Fed? — The Failure of Command and Control of Money’s Price — Interest Rates — Videos

Janet Yellennot completeFederal Reserve Board Of Governors Commemorates 100th Anniversary Of Federal Reserve Act
stay the3 coursefederal funds rate

Fed-Funds 03_Fed Balance SheetCentral-bank-balance-sheetsfed_funds_rate_qe_1_2_3Fed-AssetsFed-Balance-sheetFed-Balance-Sheet-SP500-010815 Fed-Balance-Sheet-VS-SP500-112013Federal-Reserve-Asset-Composition-QE (1)
gold federal balance sheet Mortgage-Backed-Securities-held-by-the-Federal-Reserve-All-Maturities.1 peter-catranis-fed-funds1 sp federal balance sheet

Up Up and Away

Fifth Dimension – Up Up & Away , My Beautiful Balloon

Janet Yellen’s Senate Testimony in Two Minutes

The Fed is Trapped in ZIRP World

Keiser Report: Derp-like policy of ZIRP and NIRP (E613)

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Yellen Says Fed Still ‘patient’ on Raising Rates

Peter Schiff on The Strong Dollar, U.S. market risk and Fed Chair Janet Yellen

Jim Rickards on Fed Chair Janet Yellen and The Strong Dollar

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Michael Snyder- Deflation then Inflation Through the Roof

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Milton Friedman – Abolish The Fed

Peter Schiff: Why We Should END the Fed?

Milton Friedman Explains the Cause of the Great Depression

Milton Friedman On John Maynard Keynes

Murray Rothbard on Economic Recessions

Deflation the Biggest Risk of the Economic Crisis? – Janet Yellen

Fed Reserve Janet Yellen Wont Raise Interest Rates To Fight Bubbles

The Fed and Fractional Reserve Banking Caused the Great Depression – Milton Friedman

Milton Friedman – Money and Inflation

Milton Friedman – Monetary Revolutions

Milton Friedman on Money / Monetary Policy (Federal Reserve) Part 1

Milton Friedman on Money / Monetary Policy (Federal Reserve) Part 2

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NEW WORLD ORDER 2015 ECONOMIC COLLAPSE

Colorful Time-Lapse of Hot Air Balloons in New Mexico

Abba – Money, Money, Money

WHAT IT MEANS IF FED NO LONGER SAYS IT’S ‘PATIENT’ ON RATES

For the Federal Reserve, patience may no longer be a virtue.

Surrounding the Fed’s policy meeting this week is the widespread expectation that it will no longer use the word “patient” to describe its stance on raising interest rates from record lows.

The big question is: What will that mean?

Many economists say the dropping of “patience” would signal that the Fed plans to start raising rates in June to reflect a steadily strengthening U.S. job market. Others foresee no rate hike before September. And a few predict no increase before year’s end at the earliest.

Complicating the decision is a surging U.S. dollar, which is keeping inflation far below the Fed’s target rate and posing a threat to U.S. corporate profits and possibly to the economy. A rate increase could send the dollar even higher.

In a statement it will issue when its meeting ends Wednesday and in a news conference Chair Janet Yellen will hold afterward, the Fed isn’t likely to telegraph its timetable. Yellen has said that any decision to raise rates will reflect the latest economic data and that the Fed must remain flexible.

Still, nervous investors have been selling stocks out of concern that a rate increase – which could slow borrowing and spending and weigh on the economy – is coming soon.

“I think the odds are better than 50-50 that the Fed … will drop the word `patient’ at the March meeting, and that would put an initial rate hike in play, perhaps as early as the June meeting,” said David Jones, author of several books about the Fed.

Historically, the Fed raises rates as the economy strengthens in order to control growth and prevent inflation from overheating. Over the past 12 months, U.S. employers have added a solid 200,000-plus jobs every month. And unemployment has reached a seven-year low of 5.5 percent, the top of the range the Fed has said is consistent with a healthy economy.

The trouble is that the Fed isn’t meeting its other major policy goal – achieving stable inflation, which it defines as annual price increases of around 2 percent. According to the Fed’s preferred inflation gauge, prices rose just 0.2 percent over the past 12 months. In part, excessively low U.S. inflation reflects sinking energy prices and the dollar’s rising value, which lowers the prices of goods imported to the United States.

It isn’t just inflation that remains below optimal levels. Though the job market has been strong, the overall economy has yet to regain full health. The economy slowed to a tepid 2.2 percent annual rate in the October-December quarter, and economists generally think the current quarter might be even weaker. Manufacturers are struggling with falling exports, partly because of the strong dollar, and consumers – the drivers of the economy – have seemed reluctant to spend their windfall savings from cheaper energy.

What’s more, pay for many workers remains stagnant, and there are 6.6 million part-timers who can’t find full-time jobs – nearly 50 percent more than in 2007, before the recession began.

For those reasons, some analysts think it would be premature to raise rates soon.

“The last thing the Fed wants to do right now is spook the markets and the economy into an even slower growth trajectory,” said Brian Bethune, an economics professor at Tufts University.

After it met in December, the Fed said for the first time that it would be “patient’ about raising rates. Yellen said that meant there would be no increase at the Fed’s next two meetings. And in testimony to Congress last month, she cautioned that even when “patient” is dropped, it won’t necessarily signal an imminent rate hike – only that the Fed will think the economy has improved enough for it to consider a rate increase on a “meeting-by-meeting basis.”

Some economists say the Fed may tweak its policy statement this week to signal that a higher inflation outlook would be needed before any rate hike. And they expect the Fed to go further in coming months to ready investors for the inevitable.

“The process is going to be glacial,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “They want to prepare the markets for change, but they don’t want to scare them.”

Though Swonk thinks the Fed will drop “patient” from its statement this week, she doesn’t expect a rate hike before September. Even then, she foresees only small increases in its benchmark rate.

Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, suggested that the Fed’s strategy in beginning to raise rates won’t be to slow the economy. Rather, he thinks the goal will be to manage the expectations of investors, some of whom weren’t even in business in 2004, the last time the Fed began raising rates.

“The Fed is just trying to send a message that the world is about to enter a new age after a long period of low interest rates to a period of rising rates,” Sohn said.

http://hosted.ap.org/dynamic/stories/U/US_FEDERAL_RESERVE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2015-03-16-12-46-02

Fed Watch: The End of “Patient” and Questions for Yellen

Tim Duy:

The End of “Patient” and Questions for Yellen, by Tim Duy: FOMC meeting with week, with a subsequent press conference with Fed Chair Janet Yellen. Remember to clear your calendar for this Wednesday. It is widely expected that the Fed will drop the word “patient” from its statement. Too many FOMC participants want the opportunity to debate a rate hike in June, and thus “patient” needs to go. The Fed will not want this to imply that a rate hike is guaranteed at the June meeting, so look for language emphasizing the data-dependent nature of future policy. This will also be stressed in the press conference. Of interest too will be the Fed’s assessment of economic conditions since the last FOMC meeting. On net, the data has been lackluster – expect for the employment data, of course. The latter, however, is of the highest importance to the Fed. I anticipate that they will view the rest of the data as largely noise against the steadily improving pace of underlying activity as indicated by employment data. That said, I would expect some mention of recent softness in the opening paragraph of the statement. I don’t think the Fed will alter its general conviction that low readings on inflation are largely temporary. They may even cite improvement in market-based measures of inflation compensation to suggest they were right not to panic at the last FOMC meeting. I am also watching for how they describe the international environment. I would not expect explicit mention of the dollar, but maybe we will see a coded reference. Note that in her recent testimony, Yellen said:

But core PCE inflation has also slowed since last summer, in part reflecting declines in the prices of many imported items and perhaps also some pass-through of lower energy costs into core consumer prices.

Stronger dollar means lower prices of imported items. The press conference will be the highlight of the meeting. Presumably, Yellen will continue to build the case for a rate hike. Since the foundation of that case rests on the improvement in labor markets and the subsequent impact on inflationary pressures, it is reasonable to ask:

On a scale of zero to ten, with ten being most confident, how confident is the Committee that inflation will rise toward target on the basis on low – and expected lower – unemployment?

Considering that low wage growth suggests it is too early to abandon Yellen’s previous conviction that unemployment is not the best measure of labor market tightness, we should consider:

Is faster wage growth a precondition to raising interest rates?

I expect the answer would be “no, wages are a lagging indicator.” The Federal Reserve seems to believe that policy will still remain very accommodative even after the first rate hike. We should ask for a metric to quantify the level of accommodation:

What is the current equilibrium level of interest rates? Where do you see the equilibrium level of interest rates in one year?

A related question regards the interpretation of the yield curve:

Do you consider low interest long-term interest rates to be indicative of loose monetary conditions, or a signal that the Federal Reserve needs to temper its expectations of the likely path of interest rates as indicated in the “dot plot”?

Relatedly, differential monetary policy is supporting capital inflows, depressing US interest rates and strengthening the dollar. This dynamic ignited a debate of what it means for the economy and how the Fed should or should not respond. Thus:

The dollar is appreciating at the fastest rate in many years. Is the appreciating dollar a drag on the US economy, or is any negative impact offset by the positive demand impact of looser monetary policy abroad? How much will the dollar need to appreciate before it impacts the direction of monetary policy?

Given that the Fed seems determined to raise interest rates, we should probably be considering some form of the following as a standard question:

Consider the next six months. Which is greater – the risk of moving too quickly to normalize policy, or the risk of delay? Please explain, with specific reference to both risks.

Finally, a couple of communications questions. First, the Fed is signaling that they do not intend to raise rates on a preset, clearly communicated path like the last hike cycle. Hence, we should not expect “patient” to be replaced with “measured.” But it seems like the FOMC is too contentious to expect them to shift from no hike one meeting to 25bp the next, then back to none – or maybe 50bp. So, let’s ask Yellen to explain the plan:

There appears to be an effort on the part of the FOMC to convince financial markets that rate hikes, when they begin, will not be on a pre-set path. Given the need for consensus building on the FOMC, how can you credibly commit to renegotiate the direction of monetary policy at each FOMC meeting? How do you communicate the likely direction of monetary policy between meetings?

Finally, as we move closer to policy normalization, the Fed should be rethinking the “dot plot,” which was initially conceived to show the Fed was committed to a sustained period of low rates. Given that the dot-plot appears to be fairly hawkish relative to market expectations, it may not be an appropriate signal in a period of rising interest rates. Time for a change? But is the Fed considering a change, and when will we see it? This leads me to:

Cleveland Federal Reserve President Loretta Mester has suggested revising the Summary of Economic Projections to explicitly link the forecasts of individual participants with their “dots” in the interest rate projections. Do you agree that this would be helpful in describing participants’ reaction functions? When will this or any other revisions to the Summary of Economic Projections be considered?

Bottom Line: By dropping “patient” the Fed will be taking another step toward the first rate hike of this cycle. But how long do we need to wait until that first hike? That depends on the data, and we will be listening for signals as to how, or how not, the Fed is being impacted by recent data aside from the positive readings on the labor market. http://economistsview.typepad.com/economistsview/fed_watch/

Fed Watch: ‘Patient’ is History

Tim Duy:

Patient’ is History: The February employment report almost certainly means the Fed will no longer describe its policy intentions as “patient” at the conclusion of the March FOMC meeting. And it also keep a June rate hike in play. But for June to move from “in play” to “it’s going to happen,” I still feel the Fed needs a more on the inflation side. The key is the height of that inflation bar. The headline NFP gain was a better-than-expected 295k with 18k upward adjustment for January. The 12-month moving average continues to trend higher:

NFPa030615

Unemployment fell to 5.5%, which is the top of the central range for the Fed’s estimate of NAIRU. Still, wage growth remains elusive:

NFPb030615

Is wage growth sufficient to stay the Fed’s hand?  I am not so sure. Irecently wrote:

My take is this: To get a reasonably sized consensus to support a rate hike, two conditions need to be met. One is sufficient progress toward full-employment with the expectation of further progress. I think that condition has already been met. The second condition is confidence that inflation will indeed trend toward target. That condition has not been met. To meet that condition requires at least one of the following sub-conditions: Rising core-inflation, rising market-based measures of inflation compensation, or accelerating wage growth. If any were to occur before June, I suspect it would be the accelerating wage growth.

I am less confident that we will see accelerating wage growth by June, although I should keep in mind we still have three more employment reports before that meeting. Note, however, low wage growth does not preclude a rate hike. The Fed hiked rates in 1994 in a weak wage growth environment:

NFPg030615

And again in 2004 liftoff occurred on the (correct) forecast of accelerating wage growth:

NFPf030615

So wage growth might not be there in June to support a rate hike. And, as I noted earlier this weaker, I have my doubts on whether core-inflation would support a rate hike either. That leaves us with market-based measures of inflation compensation. And at this point, that just might be the key:

NFPe030615

If bond markets continue to reverse the oil-driven inflation compensation decline, the Fed may see a way clear to hiking rates in June. But the pace and timing of subsequent rate hikes would still be data dependent. I would anticipate a fairly slow, halting path of rate hikes in the absence of faster wage growth. Bottom Line:  “Patient” is out. Tough to justify with unemployment at the top of the Fed’s central estimates of NAIRU. Pressure to begin hiking rates will intensify as unemployment heads lower. The inflation bar will fall, and Fed officials will increasingly look for reasons to hike rates rather than reasons to delay. They may not want to admit it, but I suspect one of those reasons will be fear of financial instability in the absence of tighter policy. June is in play.

https://www.youtube.com/watch?v=pvYh53vbD3g

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The Federal Reserve Opposes More Congressional Oversight and Audit Proposed By Senator Rand Paul — Audit The Fed and Then End The Fed — Videos

Posted on February 8, 2015. Filed under: American History, Banking, Blogroll, Business, College, Economics, Education, Employment, Faith, Family, Federal Government, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, government, government spending, history, History of Economic Thought, Homes, Illegal, Immigration, Inflation, Investments, Law, Legal, liberty, Life, Links, Macroeconomics, media, Microeconomics, Monetary Policy, Money, Money, People, Philosophy, Photos, Politics, Press, Raves, Resources, Strategy, Talk Radio, Tax Policy, Taxes, Unemployment, Video, War, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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Story 1: The Federal Reserve Opposes More Congressional Oversight and Audit Proposed By Senator Rand Paul — Audit The Fed and Then End The Fed — Videos

rand Paul

janet-yellen

Fed-Funds 03_Fed Balance SheetCentral-bank-balance-sheetsfed_funds_rate_qe_1_2_3Fed-AssetsFed-Balance-sheetFed-Balance-Sheet-SP500-010815 Fed-Balance-Sheet-VS-SP500-112013Federal-Reserve-Asset-Composition-QE (1)
gold federal balance sheet Mortgage-Backed-Securities-held-by-the-Federal-Reserve-All-Maturities.1 peter-catranis-fed-funds1 sp federal balance sheet

Rand Paul – Audit the Fed!

Major Move! House Passes Bill to Audit Federal Reserve!

Senator Vitter (R-LA) asks Janet Yellen about Audit the Fed (S.209)

Rand Paul on Janet Yellen, Transparency At The Fed, And Nsa Spying Bloomberg

Rand Paul: ‘Audit the Fed’ – CNBC 5/22/2013

Audit the Fed. by Ron Paul. Harry Reid gets slammed –

Fed fires back at Rand Paul

The Federal Reserve is lashing out at Sen. Rand Paul’s plan to give Congress more oversight over the central bank, a proposal that could gain traction in the new Republican-led Congress.

The Kentucky Republican reintroduced his “Audit the Fed” legislation last month with 30 co-sponsors, including other potential 2016 GOP hopefuls, Sens. Ted Cruz (Texas) and Marco Rubio (Fla.).

The proposal — once championed by his father, former Rep. Ron Paul (R-Texas) —would subject the central bank to an audit by the Government Accountability Office (GAO).

Regional bank presidents from around the country are decrying the plan, which they argue could damage the economy.

“Who in their right mind would ask the Congress of the United States — who can’t cobble together a fiscal policy — to assume control of monetary policy?” Richard Fisher, president of the Federal Reserve Bank of Dallas, said during an interview with The Hill.

Fed Chairwoman Janet Yellen has already vowed to fight the legislation, and President Obama would likely veto it.

Still, Fed watchers note that Paul has become emboldened by the new Republican majority in Congress. And he possesses an ever louder national microphone, as he moves closer to a 2016 presidential run.

Together, those factors could elevate the issue in the coming months, a prospect that has spurred strong words from bank officials.

Philadelphia Fed President Charles Plosser told The Hill that financial auditing “already exists” for the Fed, and warned that Paul’s plan would empower Congress “to audit and question monetary policy decisions in real time.”

“This runs the risk of monetary policy decisions being based on short-term political considerations instead of the longer-term health of the economy,” Plosser said.

Paul pushed back against the criticism, saying Fed officials “will say and do anything to keep their business hidden from the American people.”

For Paul, the legislation allows him to burnish his Republican-libertarian credentials.

And he appears to want to make it part of his early presidential campaigning. On Friday, Paul will hold an Audit the Fed rally in Des Moines, Iowa, as part of a weekend trip to the early presidential caucus state.

The issue could give Paul an opening to tap into the public’s mistrust of the government, more than six years after the federal bailouts that followed the 2008 economic crisis.

“This secretive government-run bureaucracy promotes policies that have impacted the lives of all Americans,” Paul said. “Citizens have the right to know why the Fed’s policies have resulted in a stagnant economy and record numbers of people dropping out of the workforce.”

Fisher said lawmakers are looking to shift blame, having proven “unable to get together with their own colleagues on a working fiscal policy or construct a regulatory regime that incentivizes investment and job creation.”

“So they simply find it convenient to create a boogeyman out of an entity that does its job efficiently — the Federal Reserve,” Fisher said. “To some outsiders the Fed appears to be some kind of combination of Hogwarts, the Death Star, and Ebenezer Scrooge — especially to those who don’t take the time to read the copious amounts of reports and speeches and explanations we emit.”

The twelve presidents of the Fed’s regional banks are well connected, their boards of directors stacked with influential business leaders. They are likely to intensify their opposition to Paul’s proposal.

On Wednesday, Cleveland Fed President Loretta Mester criticized the legislation as “misguided” during public remarks in Columbus, Ohio.

“They really are about allowing political considerations to influence monetary policy decisions,” Mester said in her speech. “This would be a tremendous mistake, because it would ultimately lead to poorer economic performance.”

Yellen, who met with Senate Democrats last week on Capitol Hill, is scheduled to testify before Congress later this month. The appearance will be her first since Republicans seized control of the Senate, and she will likely face questions on the legislation.

Senate Banking Committee Chairman Richard Shelby (R-Ala.), whose panel has jurisdiction on the bill, has also said he is interested in holding hearings on the issue.

http://thehill.com/policy/finance/231822-fed-fires-back

Rand Paul Slams Federal Reserve’s Secrecy, Reintroduces Bill to ‘Audit the Fed’

Sen. Rand Paul is reviving his push to audit the Federal Reserve.

The Kentucky Republican and presumptive 2016 presidential candidate said he wants to bring several of the Fed’s monetary activities under congressional oversight.

In a statement released Monday, Paul said it was time to end the secrecy behind the Fed. He believes an audit is the best way to do it.

“[An] audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington.” Paul said.
He slammed the Fed’s current operating practices, saying it works “under a cloak of secrecy and it has gone on for too long.”

Paul concluded that “the American people have a right to know what the Federal Reserve is doing with our nation’s money supply.”

>>> Much More to Friedman Than Rule-Based Monetary Policy

Calls for a Fed audit increased after the 2008 financial crisis. The ensuing collapse in the housing market and financial industry sparked an ongoing effort to bring more sunlight to the agency.

Norbert Michel, a research fellow in financial regulations at The Heritage Foundation, told The Daily Signal he agreed with the senator.

“There is no justification for secrecy,” Michel said. “They should have a full policy audit and the Federal Open Market Committee’s full transcript, not just the minutes, should be released.”

Although the main goal of Paul’s legislation is to have a full audit of the Fed, completed within six months, there are several other reforms he’d like to implement. They include eliminating restrictions on the Government Accountability Office’s ability to conduct oversight and giving Congress oversight of Fed policies like quantitative easing.

>>> House Republicans Attempt to Lift ‘Veil of Secrecy’ From Federal Reserve

The bill has already gained popularity in the Republican caucus with 30 co-sponsors, including Sens. Ted Cruz, R-Texas, and Marco Rubio, R-Fla., potential presidential rivals in 2016.

“The Fed has expanded its balance sheet fivefold, yet economic growth is still tepid, businesses are sitting on cash, and median income and household wealth are depressed,” Cruz noted in a statement.

Cruz also slammed the Fed for its secrecy.

“Enough is enough,” Cruz said. “The Federal Reserve needs to fully open its books so Congress and the American people can see what has been going on. This is a crucial first step to getting back to a more stable dollar and a healthy economy for the long term.”

http://dailysignal.com/2015/01/29/rand-paul-slams-federal-reserves-secrecy-reintroduces-bill-audit-fed/

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Listen To Pronk Pops Podcast or Download Show 319-327

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Listen To Pronk Pops Podcast or Download Show 296-306

Listen To Pronk Pops Podcast or Download Show 287-295

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Federal Reserve System To End The Zero Interest Rate Policy in 2015 and Financing Federal Government By Ending Quantitative Easying 3 By Fall of 2014 — No Exit Strategy — Bubbles Bursting — Videos

Posted on March 19, 2014. Filed under: American History, Banking, Blogroll, Communications, Economics, Federal Government Budget, Fiscal Policy, history, History of Economic Thought, liberty, Life, Macroeconomics, media, Monetary Policy, Money, Strategy, Talk Radio, Tax Policy, Video, Wealth | Tags: , , , , |

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Pronk Pops Show 227: March 19, 2014

Pronk Pops Show 226: March 18, 2014

Pronk Pops Show 225: March 17, 2014

Pronk Pops Show 224: March 7, 2014

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Story 1: Federal Reserve System To End The Zero Interest Rate Policy in 2015 and Financing Federal Government By Ending Quantitative Easying 3 By Fall of 2014  — No Exit Strategy — Bubbles Bursting — Videos

janet_yellen

fed-funds-rate-wiki

fed_funds_rate_qe_1_2_3

screen-shot-2014-03-18-at-5-04-49-pm

sp-500-vs-federal-reserve-balance-sheet1

chart-march14

Federal Reserve News Conference

Chair Janet Yellen held a news conference following a meeting of the Federal Reserve’s Open Market Committee.

http://www.c-span.org/video/?318360-1/federal-reserve-news-conference

Press Conference with Chair of the FOMC, Janet L. Yellen

Yellen says Fed will keep short-term interest rates low

Janet Yellen Slip Sinks Dow, But Don’t Overestimate the Comment

Further gradual reduction in Federal Reserve stimulus expected at Yellen led meeting – economy

PROOF The Fed. Is Clueless: Stock Market MELTDOWN Coming. By Gregory Mannarino

Size of the Fed’s Balance Sheet is Concerning

EU European Union Economic Crisis 2013 2014 ; Jim Rickards Economy 2014

Marc Faber Gold, SIlver Won’t Collapse…. Outlook and Analysis

What’s the Deal with Zero Interest Rate Policy? – Laissez Faire Today Exclusive

Economic Meltdown 2014 – Financial Collapse – Gerald Celente – Peter Schiff

Fed’s No. 2 Strongly Backs Low-Rate Policy

Marc Faber: Fed Is ‘Boxed In’ With No Exit Strategy, Won’t End Quantitative Easing

Zero Interest Rate Policy (ZIRP) & Inflation

Talking to Chris Aiello, Managing Director at Dynasty Global Capital in Hong Kong. Chris discusses the zero interest rate policy followed by the Federal Reserve Bank in the United States and the impact on global economy of such a policy.

Michael Covel 001: Zero Interest Rate Policy

Ron Paul Hearing on the Fed’s Manipulation of Interest Rates 9/21/12

Ron Paul ~ The Fed Has Lost Control Of Interest Rates

Milton Friedman on the Failure of Wage and Price Controls

Banking 14: Fed Funds Rate

Banking 15: More on the Fed Funds Rate

Banking 16: Why target rates vs. money supply

Banking 17: What happened to the gold?

Banking 18: Big Picture Discussion

Quantitative Easing — How Does it Work in the Real World?

The video “Quantitative Easing — How Does It Work in the Real World?” explains in detail how the Federal Reserve injects freshly printed money into the real economy and how it may impact the stock market, and your purchasing power. Understanding the QE program and process in detail is extremely important relative to making the best investment decisions possible. Hedge funds, sovereign wealth funds, pension fund, high net worth investors, and alternative asset managers all over the globe will be receiving freshly printed U.S. dollars when they participate in the Fed’s Treasury buying and open market operations related to quantitative easing. Money manager Chris Ciovacco explains how the Fed can inflate the money supply while pushing new dollars into the stock, bond, commodity, currency, gold, silver, and precious metals markets. Understanding the lines of business and clients of the primary QE dealers will give you a rare and detailed insight into quantitative easing , Ben Bernanke, the Federal Reserve, open market operations, and global finance. The educational video, “Quantitative Easing — How Does It Work in the Real World?” was filmed and produced in Atlanta.

Quantitative Easing, the Fed, Finance, and Inflation — QE

The video, “Quantitative Easing (QE), The Federal Reserve, Finance, and Inflation” explains how the Fed “prints money” and who gets the new U.S. dollars. Primary Broker-Dealers, not traditional banks, are involved in the QE process and program. Understanding how QE works enables investors to make better asset allocation and investment decisions or formulate quantitative easing strategies related to wealth preservation and gold. The Fed encourages the Primary Dealers to involve their clients in the bond purchase program, which sheds light on how the printed money gets into the real economy. Chris Ciovacco, of Ciovacco Capital Management provides commentary, insight, and investment analysis as it relates to QE2. The brief educational video, “Quantitative Easing, The Fed, Finance, and Inflation — QE” was filmed in downtown Atlanta.

Quantitative Easing Bernanke — History & Objectives of QE

The video “Quantitative Easing — Ben Bernanke — History and Objectives of QE” gives insight into the Federal Reserve’s perspective of the need to print money in order to stimulate the economy, financial markets, and investing. Writings and comments from Brian Sack and Ben Bernanke are reviewed and analyzed as it relates to inflation, deflation, interest rates, household wealth, mortgage rates, asset prices, investing, money printing, and gold. Bernanke’s “helicopter speech” and “printing press” comments are reviewed in the context of quantitative easing and precious metals, the dollar, gold, and silver. The value of the U.S. dollar, inflation, and purchasing power are covered within the context of an inflation of the money supply via the “printing press”. The brief video “Quantitative Easing Bernanke — History & Objectives of QE” is presented by Chris Ciovacco of Ciovacco Capital Management.

Quantitative Easing (QE) 2010 — 2011 Why is the Fed printing money?

Video explains how the Federal Reserve’s QE program works. Primary broker-dealers, not banks, are the primary recipients of the Fed’s newly printed money. You Tube video explains how the Fed inflates the money supply via a bond purchase program with the NY Fed’s 18 primary dealers. Investment strategies and purchasing power protection can be better understood if investors understand the quantitative easing process and the primary dealer’s lines of business, involvement in global markets, and global client base. Hedge funds, sovereign wealth funds, and high net worth investors all over the globe can participate in the QE 2.0 process. Chris Ciovacco, of Ciovacco Capital Management, explains the possible impacts of the Federal Reserve’s quantitative easing program on the financial markets and your investments. The brief video “Quantitative Easing Explained” or “QE2 Explained” will provide rare insight into the Fed’s balance sheet policies.

Quantitative Easing Explained — Who Gets Fed’s Printed Money?

Video explains how the Federal Reserve’s QE program works. Primary broker-dealers, not banks, are the primary recipients of the Fed’s newly printed money. You Tube video explains how the Fed inflates the money supply via a bond purchase program with the NY Fed’s 18 primary dealers. Investment strategies and purchasing power protection can be better understood if investors understand the quantitative easing process and the primary dealer’s lines of business, involvement in global markets, and global client base. Hedge funds, sovereign wealth funds, and high net worth investors all over the globe can participate in the QE 2.0 process. Chris Ciovacco, of Ciovacco Capital Management, explains the possible impacts of the Federal Reserve’s quantitative easing program on the financial markets and your investments. The brief video “Quantitative Easing Explained” or “QE2 Explained” will provide rare insight into the Fed’s balance sheet policies.

QE2: Quantitative Easing Investing & Stock Market Consequences

Video covers quantitative easing investing and stock market strategies. How gold may be used to protect your purchasing power from QE2. Asset class and investment options are discussed for inflation and deflation, spanning gold, silver, copper, oil, stocks, dividend payers, CDs, utilities, consumer staples, and cash. With the economy and financial markets dealing with inflationary and deflationary forces, flexible investment strategies are needed. Chris Ciovacco, of Ciovacco Capital Management, provides commentary and analysis on QE 2.0, the U.S. Dollar, euro, possible economic and market outcomes related to the Federal Reserve’s program to print money. “Quantitative Easing Investing and Stock Market Consequences” was recorded in Atlanta covering 2010 and 2011 investment strategies.

U.S. Stocks Drop as Fed’s Yellen Outlines Stimulus Exit

By Callie Bost  Mar 19, 2014 3:02 PM CT

U.S. stocks fell for the first time in three days as Federal Reserve Chair Janet Yellen said the central bank’s stimulus program could end this fall and benchmark interest rates could rise six months later.

The S&P 500 slipped 0.6 percent to 1,860.83 at 4 p.m. in New York. The Dow Jones Industrial Average (INDU) slid 113.51 points, or 0.7 percent, to 16,222.68. Trading volume for S&P 500 stocks was in line with the 30-day average at this time of day.

“The pace of tightening, once the Fed starts tightening, is a little bit faster than thought before and I think that’s why we’re getting this market reaction,”John Canally, an economic strategist at LPL Financial Corp., said in a phone interview from Boston. His firm oversees about $438.4 billion. “Being reminded that the Fed will eventually raise rates is getting traders’ attention. We’re still a long way off and there are no signs in the economy about inflation.”

By keeping its benchmark interest-rate target near zero and conducting three rounds of asset purchases, the Fed has helped push the S&P 500 up as much as 178 percent from a 12-year low as U.S. equities enter the sixth year of a bull market that started in March 2009.

Higher Rates

Stocks turned lower today as the Fed’s statement said officials predicted their target interest rate would be 1 percent at the end of 2015 and 2.25 percent a year later, higher than previously forecast, as they upgraded projections for gains in the labor market.

Most Federal Open Market Committee participants reiterated their view that the Fed will refrain from raising the benchmark interest rate until 2015. The median rate among 16 Fed officials rose from December, when they estimated the rate at the end of next year at 0.75 percent, and 1.75 percent for the end of 2016. The central bank said it will look at a wide range of data in determining when to raise its rate from zero, dropping a pledge tying borrowing costs to a 6.5 percent unemployment rate.

Benchmark indexes extended losses as Yellen said the quantitative easing program would end this fall if the Fed continues to taper purchases in measured steps. She sees a “considerable time” between the end of the stimulus and the first rate increase, meaning “six months or that type of thing,” she said at her first press conference following a Fed decision.

‘Risk Factor’

“U.S. indices are moving quickly on Yellen’s comments,” Larry Peruzzi, senior equity trader at Cabrerra Capital Markets LLC in Boston, said in an e-mail. “Equities are adjusting the risk factor of higher rates.”

The S&P 500 advanced 1.7 percent in the last two days as Russia pledged not to seek territory beyond Crimea. The U.S. and Europe are preparing to ratchet up sanctions on Russia after President Vladimir Putin signed an accord setting in motion Crimea’s accession to Russia. With visa bans and asset freezes on Russian officials failing to sway Putin, European Union leaders will meet tomorrow to consider “additional and far-reaching consequences.”

Investors have added $8 billion to U.S. equity exchange-traded funds in the past five days and $1.1 billion to bond ETFs, data compiled by Bloomberg show. Materials stocks absorbed the most money among industry ETFs, taking in $689 million during the past week.

http://www.bloomberg.com/news/2014-03-19/u-s-stock-index-futures-are-little-changed-before-fomc.html

Recap: Janet Yellen’s Press Conference and Fed Decision

Janet Yellen wrapped up her first policy meeting Wednesday as chairwoman of theFederal Reserve, then stepped in front of reporters (and live cameras) for her first press conference.

The new chairwoman had a big job, explaining a major shift in forward guidance for when the central bank might increase rates. In her press conference, she suggested that might be around six months after the Fed ends its bond-buying program.

  • Welcome to another big day in Fed land. Our nation’s central bankers have likely wrapped up their two-day meeting by now. We’re waiting for the Federal Open Market Committee’s policy statement at 2 p.m., along with updated projections from all Fed officials. Then we get Janet Yellen herself half an hour later, at 2:30, for her first press conference.We should have answers to a number of key questions over the next few hours: If the Fed ditches it forward guidance about interest rates, what will replace it? Did Chairwoman Yellen maintain consensus on the committee?  Will she stick around for a couple of hours answering reporters’ questions, like she did with lawmakers?
  • Fun Fed fact, which all you Fed geeks out there surely knew already: Janet Yellen was a driving force behind Fed press conferences.

    As Fed vice chairman, she led a committee shaping the central bank’s overhaul of its communication strategy: the statement, the economic projections, the press conference and more. So if she doesn’t like what she faces in a few hours, she can only blame herself.

    We’ve been doing this for a few years. While you’re waiting, take a trip into our archives for a peek at prior press conferences. It started way back in the days of QE2. long before the word “taper” became the subject of heated dinner-table conversation among economists.

    http://blogs.wsj.com/economics/2014/03/19/live-blog-janet-yellens-press-conference-after-fed-decision/

 

The Pronk Pops Show Podcasts Portfolio

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No Tapering! — Spending Addiction Disorder (SAD) — Fed Must Continue Massive Financing of Deficits and Debt of Federal Government — Digital Electronic Money (DEM) Creation Continues At $85 Billion Per Month or $1,020 Billion Per Year Pace — U.S. Economy Stagnating Below 3 Percent GDP Growth Trend Line — U.S. Dollar Devalued — Currency War Continues — Abolish The Fed Videos

Posted on September 19, 2013. Filed under: American History, Banking, Blogroll, College, Communications, Economics, Education, Employment, European History, Federal Government, Federal Government Budget, Fiscal Policy, government spending, history, History of Economic Thought, Inflation, Investments, IRS, Law, liberty, Life, Links, Macroeconomics, media, Microeconomics, Monetary Policy, Money, People, Philosophy, Photos, Politics, Programming, Psychology, Raves, Regulations, Resources, Security, Strategy, Talk Radio, Tax Policy, Taxes, Technology, Unemployment, Video, Wealth, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , |

5-reasons-the-fed-taper-will-kick-off-in-september

Tracking-the-Fed-September

U.S. National Debt Clock

BUREAU OF THE FISCAL SERVICE
                                                  STAR - TREASURY FINANCIAL DATABASE
             TABLE 1.  SUMMARY OF RECEIPTS, OUTLAYS AND THE DEFICIT/SURPLUS BY MONTH OF THE U.S. GOVERNMENT (IN MILLIONS)

                                                        ACCOUNTING DATE:  08/13

   PERIOD                                                                     RECEIPTS                OUTLAYS    DEFICIT/SURPLUS (-)
+  ____________________________________________________________  _____________________  _____________________  _____________________
   PRIOR YEAR

     OCTOBER                                                                   163,072                261,539                 98,466
     NOVEMBER                                                                  152,402                289,704                137,302
     DECEMBER                                                                  239,963                325,930                 85,967
     JANUARY                                                                   234,319                261,726                 27,407
     FEBRUARY                                                                  103,413                335,090                231,677
     MARCH                                                                     171,215                369,372                198,157
     APRIL                                                                     318,807                259,690                -59,117
     MAY                                                                       180,713                305,348                124,636
     JUNE                                                                      260,177                319,919                 59,741
     JULY                                                                      184,585                254,190                 69,604
     AUGUST                                                                    178,860                369,393                190,533
     SEPTEMBER                                                                 261,566                186,386                -75,180

       YEAR-TO-DATE                                                          2,449,093              3,538,286              1,089,193

   CURRENT YEAR

     OCTOBER                                                                   184,316                304,311                119,995
     NOVEMBER                                                                  161,730                333,841                172,112
     DECEMBER                                                                  269,508                270,699                  1,191
     JANUARY                                                                   272,225                269,342                 -2,883
     FEBRUARY                                                                  122,815                326,354                203,539
     MARCH                                                                     186,018                292,548                106,530
     APRIL                                                                     406,723                293,834               -112,889
     MAY                                                                       197,182                335,914                138,732
     JUNE                                                                      286,627                170,126               -116,501
     JULY                                                                      200,030                297,627                 97,597
     AUGUST                                                                    185,370                333,293                147,923

       YEAR-TO-DATE                                                          2,472,542              3,227,888                755,345

http://www.fms.treas.gov/mts/mts0813.txt

civilian_labor_participation_rate

InflationAug2013

US-Fed-Funds-Target-Rate

savings

fed_taper_bets

When-To-Taper

fed_taper

wrong_way

US Chairman of the Federal Reserve Ben Bernanke listens to questions as he testifies before a House Budget Committee on Capitol Hill in Washington

2013-09-17-bernanke-hands-over-control

janet_yellen

Tracking-the-Fed-September

Federal Reserve Vice Chair Janet Yellen addresses a conference in Washington

No Fed Taper: What Does It Mean for Your Money? (9/18/13)

Federal Reserve: No Taper (9/18/13)

Ron Paul: Fed Decision To Not Taper Is A Really Bad Sign

Ron Paul: Taper Fakeout Means Fed Is Worried

Breaking News: Federal Reserve Will Not Taper

Rick Santelli Reacts to Federal Reserve No Taper

Why The Fed. Will INCREASE, NOT DECREASE, It’s QE/Money Printing. By Gregory Mannarino

In Business – Fed Taper Pause Fuels Commodities Rally

To Taper, or Not to Taper

FED Says No Taper — We Need A War, Gun Confiscation And Control Of Internet First — Episode 166

JIM RICKARDS: Fed Will TAPER in September or Never, and the Looming MONETARY System COLLAPSE [50]

James Rickards on “Why The Fed Will NOT Taper Quantitative Easing”

Peter Schiff: “The party is coming to an end”.

JIM ROGERS – When the FED stops PRINTING FIAT CURRENCY the COLLAPSE will be here. PREPARE NOW

Fed decision Just idea of tapering caused huge ruckus

Background Articles and Videos

Milton Friedman – Abolish The Fed

Milton Friedman On John Maynard Keynes

Free to Choose Part 3: Anatomy of a Crisis (Featuring Milton Friedman)

Murray Rothbard – To Expand And Inflate

The Founding of the Federal Reserve | Murray N. Rothbard

The Origin of the Fed – Murray N. Rothbard

Murray Rothbard on Hyperinflation and Ending the Fed

Murray N. Rothbard on Milton Friedman (audio – removed noise) part 1/5

Keynes the Man: Hero or Villain? | Murray N. Rothbard

WASHINGTON (AP) — The Federal Reserve has decided against reducing its stimulus for the U.S. economy, saying it will continue to buy $85 billion a month in bonds because it thinks the economy still needs the support.

The Fed said in a statement Wednesday that it held off on tapering because it wants to see more conclusive evidence that the recovery will be sustained.

Stocks spiked after the Fed released the statement at the end of its two-day policy meeting.

In the statement, the Fed says that the economy is growing moderately and that some indicators of labor market conditions have shown improvement. But it noted that rising mortgage rates and government spending cuts are restraining growth.

The bond purchases are intended to keep long-term loan rates low to spur borrowing and spending.

The Fed also repeated that it plans to keep its key short-term interest rate near zero at least until unemployment falls to 6.5 percent, down from 7.3 percent last month. In the Fed’s most recent forecast, unemployment could reach that level as soon as late 2014.

Many thought the Fed would scale back its purchases. But interest rates have jumped since May, when Fed Chairman Ben Bernanke first said the Fed might slow its bond buys later this year. But Bernanke cautioned that the reduction would hinge on the economy showing continued improvement.

In its statement, the Fed says that the rise in interest rates “could slow the pace of improvement in the economy and labor market” if they are sustained.

The Fed also lowered its economic growth forecasts for this year and next year slightly, likely reflecting its concerns about interest rates.

The statement was approved on a 9-1 vote. Esther George, president of the Federal Reserve Bank of Kansas City, dissented for the sixth time this year. She repeated her concerns that the bond purchases could fuel the risk of inflation and financial instability.

The decision to maintain its stimulus follows reports of sluggish economic growth. Employers slowed hiring this summer, and consumers spent more cautiously.

Super-low rates are credited with helping fuel a housing comeback, support economic growth, drive stocks to record highs and restore the wealth of many Americans. But the average rate on the 30-year mortgage has jumped more than a full percentage point since May and was 4.57 percent last week — just below the two-year high.

The unemployment rate is now 7.3 percent, the lowest since 2008. Yet the rate has dropped in large part because many people have stopped looking for work and are no longer counted as unemployed — not because hiring has accelerated. Inflation is running below the Fed’s 2 percent target.

The Fed meeting took place at a time of uncertainty about who will succeed Bernanke when his term ends in January. On Sunday, Lawrence Summers, who was considered the leading candidate, withdrew from consideration.

Summers’ withdrawal followed growing resistance from critics. His exit has opened the door for his chief rival, Janet Yellen, the Fed’s vice chair. If chosen by President Barack Obama and confirmed by the Senate, Yellen would become the first woman to lead the Fed.

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